A Harvard expert on U.S.-Asia relations discussed the findings of his new book “China’s Crisis of Success” amidst highly publicized economic clashes between the U.S. and China Thursday evening at Memorial Union.
William Overholt, a senior fellow at Harvard University, compared U.S. and China’s relationship to economic anxieties surrounding Japan in previous decades, which ultimately had few economic ramifications.
China is having to contend with new economic and political struggles due to years of continuous economic growth. He framed the current predicament as similar to the challenges of a growing business that goes public — suddenly the company requires a period of transformation to account for a more complex business environment.
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“You just have to transform that organization, and if you get through that threshold successfully, you keep on going,” Overholt said.
China’s economy has become too complex to be managed from the capital city, Beijing, Overholt said.
Though China’s government had planned to adapt to the changing economy long before Chinese President Xi Jinping took power, the country has run into difficulties implementing their plans because they have not sufficiently dealt with rising political pressures, Overholt said.
“On the political side, the theory has been that [the U.S.] is going to sit on the lid of the boiling pot and pile more and more weight on the boiling pot and hope it doesn’t blow off,” Overholt said. “There’s a very fundamental tension between the economics and the politics.”
Jinping has been successful in centralizing power, but he has either been unable or unwilling to make hard decisions that are necessary for reformation, Overholt said. While some compare the leader to Russian President Vladimir Putin, Jinping shares more in common with Theresa May’s handling of Brexit, he said.
However contentious China’s current political and economic situation is, Overholt said the country is not headed for revolution, departing from a common view that says sustained development requires political inclusion.
China has been successful in promoting societal inclusion while maintaining centralization by making land ownership, education and employment possible for all citizens. Overholt said 85 percent of families in China are homeowners.
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China has said they will turn to political reform after successful economic reform, Overholt said, but that doesn’t necessarily mean the country is headed towards a Western democracy like much of Europe or the U.S.
“I deliberately talk about liberalization and complexity without ever using the Western pluralism,” Overholt said. “I think we need to give the Chinese a chance to find their own way.”
But, if China completes one reform and not the other, the country could head down a dangerous path, Overholt said.
If China completes economic reforms while ignoring political reform, it’s possible the country could run into a political crisis, Overholt said. Conversely, if China doesn’t go through with economic reforms, the economy could stagnate as Japan’s did in the 1970s. The difference, however, would be that Japan stagnated at around $45,000 per capita while China’s currently hovers around $15,000 — a level of prosperity Chinese people would not accept.
Succeed or fail economically, China will eventually have to deal with transforming, in one way or another, their political system, Overholt concluded.